Apple unveiled the next iteration of their Macbook, Macbook Pro, and Macbook Air laptop lines yesterday, but what was most notable about the announcement wasn’t new technology, features, or cosmetic changes, but rather what is lacking from the line. Apple has always been a manufacturer of high end computers with matching prices, but as they continue increasing their market share through a push into the mainstream, it makes sense to lower the barrier of entry for the brand. If they hope to continue expansion among students and consumers who don’t identify as tech enthusiasts, they need to extend their product line into a lower price bracket – not into netbook (low cost, modestly configured laptops designed for light tasks such as web browsing and basic word processing) territory, but low enough to compellingly compete with entry level offerings from PC manufacturers such as Dell, Acer, and HP.
Apple has always been about the high end
It is true that Apple has traditionally focused on, and seen it’s biggest success in, the $1,000+ segment of the market. There are a number of key advantages to this strategy that have benefited the company. For one, consumers who are more likely to spend more on a computer are going to be less effected by economic swings and trends than those who are looking for the least expensive solution. It’s no coincidence that Apple has been one of the few computer makers experiencing rapid growth during the beginnings of the recession that we now find ourselves in. Apple’s hardware and software engineers are also free to make a superior product with fewer compromises in the name of cost, and can afford to invest in R&D resulting in a wide array of projects that might never make it to market in their original form, but that will often yield technology that trickles down into subsequent products. One needs only look as far as the phenomenally successful iPhone, whose operating system, multi-touch technology, form factor, and user interface borrowed from projects like the OS X operating system used in all macs, a never released internet tablet, the wildly successful iPod line of MP3 players, and the almost forgotten Newton – an innovative device that helped spawn the PDA market.
Apple’s core strength is the user experience
Ask almost anybody with a Mac and they’ll tell you that it just works. Apple makes meticulously designed products that offer a continuously superior experience, from the initial unboxing to the point where you transfer all of your files over to a new machine years later. The hardware is gorgeous, with features and technology that are integrated into a sleek, minimalist package, as opposed to offerings from competitors that often feel cheap, bloated with unnecessary features that never get used, and are presented in a manner than inspires little confidence. The software is perhaps even more notable that the hardware. Not only is OS X much more stable and impervious to viruses and malware than any consumer flavor of Windows, but it provides a clean look that is consistent across almost all applications, and is designed with the end user in mind. Want to save a picture from a webpage? Simply click on it and drag it to your hard drive. Want to back up all of your files? Simply run Time Machine, an included program that will automatically archive your entire computer on a regular basis, allowing you to retrieve old files, or even restore your computer to the state is was in weeks ago at any point. Each Mac also ships with iLife, a suite of applications including iMovie, iPhoto, GarageBand, and several others that make every Apple computer a formidable multimedia workstation (for consumer-oriented uses) right out of the box.
Repeat Apple customers are willing to spend more on subsequent purchases
Apple’s growth has been fueled by “switchers”, or computer users who go from a PC running Windows to a Mac running OS X. This is particularly favorable to the company because once a user becomes accustomed to the Apple experience, they are often willing to spend more for a Mac when it comes time to purchase their next computer, and we see a lot of users moving up the product line. It’s not at all uncommon for a Mac using household to have multiple machines in service, as an initial Mac Mini purchase can lead to an iMac for the home office, a Macbook for a child who is going off to school, a Macbook Air for business travel, and so on. Once people experience the benefits of Apple hardware and OS X, the higher price of these computers becomes a much easier sell.
For example, when the time came for my mother-in-law to retire her old computer this year (a AMD Athlon 1.4Ghz machine that I built for her in 2002), I recommended she purchase an iMac. She was initially weary of the idea, as she has spent the last 10 years learning how to use Windows, but I was able to convince her that after a small adjustment period she’d find the new computer significantly easier to use, less prone to crashes and viruses, and virtually impervious to the annual slowdown that almost invariably requires me to come and perform a variety of maintenance, if not reformat the drive and reinstall Windows and all of her applications. As much as the thought of something completely new was daunting, the biggest challenge in switching her over to a Mac was the fact that an iMac would cost her several hundred dollars more than an equivalent PC.
Within 2 days of setting up the new iMac she already was declaring that this was the best computer she had ever owned. It took her very little time to adjust to the differences, and she found that she preferred the way the mac works in almost every case. Perhaps the best part is that in the almost 6-months since I set the computer up for her I’ve received only one tech support call, and she was able to resolve the issue on her own before I could even call her back. Her iMac works just as well now as it did the day she brought it home, and the next time she buys a computer she won’t so much as blink at the higher price of an Apple computer.
A lower cost Macbook will attract more switchers and take advantage of the “halo effect”, without cannibalizing sales of higher end models
The goodwill generated by Apple’s consumer products like the iPod and iPhone are responsible for something called the halo effect, basically meaning that these customers will be impressed enough by their experience with these consumer products that they will be driven towards Macs for future computer purchases. These consumers are the fuel beyond Apple’s past and future growth, and the biggest factor limiting this potential is the high cost of entry. An $800 Macbook with more modest specifications would attract more of this demographic, exposing them to the Mac user experience, and would result in more loyal, repeat business, actually increasing the sales of higher-priced Macs. Once users have grown accustomed to using Apple computers, they will begin to make purchasing comparisons and decisions from within the Mac line, with less consideration given to lower priced PC competition, which will lead more customers to mid and high-end machines. While some current Mac users would doubtlessly be enticed by a lower priced Macbook, the sweet spot in the lineup (in terms of price to value) would still lie in the mid range models.
The entry level Macbook must cosmetically match the rest of the line
Along with the new notebooks released yesterday, Apple dropped the price on the previous generation Macbook to $999, and will continue to sell it along side the new models. While this is a step in the right direction, much of the Apple allure is steeped in aesthetics and image. Even though customers now have a sub $1,000 option, it will increasingly be perceived as the old model and a compromised product, at least in the minds of lay consumers. New customers (who are likely comparing a Macbook to lower priced PC alternatives) should have the perception that they can buy into the current generation Mac line at a lower price point, not that they can have old recycled technology for a slight discount. By giving the option of a lower specced Macbook for $800, Apple could ensure future sales of mid and upper range Macbooks, continue to experience sales growth during this economic slowdown, and enjoy the fruits of an expanded, loyal user base who will continue to choose apple (often at a higher price point) once the economy turns around.
